Appendix 3: Proposal for Patent Pool for Essential Medicines (PPEM)

Addis Ababa – 3 March 2005

The creation of a Patent Pool for Essential Medicines (PPEM) can facilitate the sustainable scaling up of treatment access, and provide a new and useful mechanism for countries to manage intellectual property rights.

A patent pool is an arrangement for the collective management of patent rights. The pools provide for systematic licensing of multiple patents. While most patent pools today are based upon voluntary agreements, including for example patent pools involving the manufacture of DVDs, radios and other consumer electronic products, or patent pools on agriculture products or SARS, there have also been cases where patent pools were mandated by government policy, such as the US experience in creating the Manufacturers Aircraft Association (MAA) patent pool to overcome barriers for the scaling up of aircraft manufacturing.

The rationale for creating a patent pool for essential medicines is as follows:

  1. The high cost of patented medical products, when marketed by a monopoly, is a barrier to providing access to medicines for all.

  2. Patents on essential medical inventions restrict innovation and adaptation of medicines and devices to fit the needs of patients such as different formulations, combinations, dosages and medicine forms. Innovation and adaptation is necessary to cope with the differing viral strains, changing immunities, related infectious diseases, local health system conditions and local patient customs, and to enhance patient compliance with treatment regimes.

  3. Economies of scale and access to manufacturing know-how are important for efficient manufacturing of essential medical treatments and devices.

  4. The multitude of patents, potential claims of infringement, variance of national laws, complexity of international treaties and national patent laws, and patent restrictions on the export of essential medical technologies, have presented barriers for access to medicines for all.

The PPEM would provide a framework for addressing these problems.

  1. A patent pool would be created as a non-profit entity.

  2. The PPEM would identify the patents relevant to manufacturing, importing, exporting and selling essential medicines.

  3. The PPEM would simultaneously negotiate agreements with patent holders and national governments.

  4. Patent owners would be asked to voluntarily license patents to the PPEM, for use in countries [in Africa] or [not designed as high income by the World Bank].

  5. In cases where the PPEM failed to obtain voluntary licenses, it would seek compulsory licenses.

  6. Licensing by the PPEM, under voluntary or non-voluntary arrangements, would follow “best practice” models, including:
    1. Consistency with national patent laws and trade agreements on patents,
    2. Non-discriminatory “open” license to any qualified party,
    3. Rights to manufacture, export, import and sell,
    4. Adequate remuneration using transparent and predictable royalty guidelines,
    5. Requirements that patent owners met appropriate standards of quality.
The PPEM would offer the following benefits to various parties:

  1. Patients. The PPEM would promote competition and lower prices, provide enhanced access to follow-on innovations, such as new FDCs, better heat stabilization, or other delivery mechanisms, and licenses would be tied to appropriate standards for product quality.

  2. National governments. The PPEM would provide technical assistance, a creditable and politically acceptable approach to the granting of compulsory licenses, acting together with other countries.

  3. Patent owners. The PPEM would provide a predictable and fair system for remuneration, and would comply with national patent laws and trade agreements on patent rights.

  4. Generic competitors. The PPEM would provide access to a larger generic market.

  5. Donors. The PPEM would ensure that the “solution” to the patent problem was focused on (a) the rule of law, (b) open competition, and (c) efficiency.

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